Airlines traditionally aren’t the greatest dividend stocks. Southwest Airlines (LUV ) and the parent of American Airlines (AAL), for example, each yield about 1.1%, while United Airlines’ parent (UAL) and Spirit Airlines (SAVE), to name two, don’t pay dividends at all.
Overall, in fact, the cyclical airline business generally has been a poor long-term bet. The Oracle of Omaha himself, Warren Buffett, has labeled the industry a “death trap for investors.”
Ad Dollars Better Spent
So since few investors looking for yield are likely to buy airline stocks, maybe today’s criticism of American Airlines’ new advertising campaign is just beating a dead horse. On the other hand, the multimillion dollar cost of the campaign probably could have been better spent to make being a customer of American a more enjoyable experience — which could lead to greater profitability and perhaps even a bigger dividend.
